Court clears AT&T’s $81-billion purchase of Time Warner

WASHINGTON — A federal appeals court on Tuesday cleared AT&T’s takeover of Time Warner, rejecting the Trump administration’s claims that the $81 billion deal will harm consumers and reduce competition in the TV industry.

The ruling by the US Court of Appeals in Washington came in the high-stakes competition case, approving one of the biggest media marriages ever. It was already completed last spring, soon after a federal trial judge approved it. AT&T, a wireless carrier and TV and home internet provider, absorbed Time Warner, the owner of CNN, HBO, the Warner Bros. movie studio, “Game of Thrones,” sports programming and other shows.

Many observers had expected the decision favorable to AT&T from the three-judge appeals court panel. The decision was unanimous to uphold the trial judge’s June ruling. Opposing the merger forced the Justice Department to argue against standing legal doctrine that favors mergers among companies that don’t compete directly with each other, what’s known as a vertical merger.

The US antitrust lawsuit against Dallas-based AT&T marked the first time in decades that the government has challenged that doctrine by suing to block a vertical merger.

The ruling dealt a major setback to the Trump Justice Department. The department said it won’t appeal the ruling. Its chances of prevailing at the Supreme Court were considered dim.

“We are grateful that the Court of Appeals considered our objections to the district court opinion,” spokesman Jeremy Edwards said. “The department has no plans to seek further review.”

The appeals court judges said US District Judge Richard Leon was correct to dismiss the government’s argument that AT&T’s takeover of Time Warner would hurt competition, limit choices and jack up prices for consumers to watch TV and movies.

“The government failed to meet its burden of proof” for its theory that costs for Time Warner’s Turner Broadcasting content would increase after the merger, mainly through threats of programming “blackouts,” the judges wrote. The Turner networks include CNN.

The Justice Department antitrust attorneys had asserted that Leon misunderstood the complexities of the TV industry and the nature of AT&T’s competitors.

The idea behind the merger was to help AT&T — which claims about 25 million of the 90 million US households that are pay TV customers — compete better with online rivals like Netflix, YouTube and Hulu.

AT&T already had a streaming service, DirecTV Now, but it launched a cheaper offering called WatchTV soon after the deal closed. It’s planning another streaming service, “WarnerMedia,” for later this year.